You probably already own a piece of something haram. For most young Malaysian Muslims, the first portfolio we build is quietly mixed, and nobody flags it until we start asking. It could be through EPF Account 1, which invests across the broad Malaysian market including conventional banks and breweries, unless you actively switch to Simpanan Shariah. A unit trust your uncle recommended in 2019, which may or may not have been Shariah-compliant to begin with. Or a robo-advisor that optimises for low fees, but never once asked whether the underlying stocks deal in riba, gambling, or alcohol.
Shariah-compliant ETFs are one of the cleanest fixes available. They give you low-cost, transparent, exchange-traded exposure to markets that have already been filtered by a Shariah board, screened against global standards, and rebalanced on a schedule. This article walks through what separates a Shariah-compliant ETF from a conventional one, the options listed on Bursa Malaysia and abroad, the platforms you can actually use from KL or Johor Bahru, and what to weigh before you press buy.
How Shariah-compliant ETFs actually get screened
An ETF becomes Shariah-compliant only after it passes two gates: a business activity screen and a financial ratio screen.
1. The business activity screen
This filters out companies that make meaningful revenue from non-permissible industries, including conventional banking and insurance, alcohol and tobacco, pork-related products, gambling and adult entertainment, and weapons.
The universal ceiling for incidental haram income sits at around 5% of total revenue under the FTSE Russell Shariah methodology. In Malaysia, the Securities Commission tightened its rules in November 2025 to apply a single 5% benchmark for all non-permissible activities, replacing the older two-tier 5%/20% system.
2. The financial ratio screen
This checks a company's debt and interest exposure. Different index providers set slightly different thresholds:
- AAOIFI Standard 21: The strictest globally, keeping both debt and interest-bearing securities under 30% of market capitalisation.
- S&P Dow Jones Indices and the Dow Jones Islamic Market methodology: A slightly looser 33% threshold against a 24 to 36 month average market cap.
- MSCI Islamic and FTSE: Use total assets as the denominator, which is steadier because it does not swing with share prices.
- SC Malaysia Shariah-compliant securities screening methodology: Applies a similar 33% threshold on total assets.
Two Shariah-compliant ETFs can therefore hold slightly different stocks depending on whose index they track, and all of it is still valid.
3. The governance layer
Screening alone is not enough. Every Shariah ETF also sits under human oversight. A Shariah Supervisory Board that follows AAOIFI governance standards approves the methodology, signs off on rebalances, and publishes an annual compliance report. In Malaysia, the Shariah Advisory Council of the SC is the statutory authority for the Islamic capital market and publishes the official list of Shariah-compliant securities twice a year. For international funds, advisors like Yasaar, ShariaPortfolio, and Amanie Advisors do the heavy lifting.
Why ETFs could be the best choice for you
Buy and sell anytime (liquidity). ETFs trade on the stock exchange during market hours, so you can buy or sell at a live price whenever the market is open. Unit trusts only process orders once a day at the closing price, which means you wait. For most long-term investors it is not a dealbreaker, but it does mean you are never locked in.
Low cost. Actively managed Islamic unit trusts in Malaysia often charge total expense ratios between 1.5% and 1.8% a year, plus front-end sales charges that can reach 5% of what you put in. A passive Shariah ETF typically costs 0.30% to 0.55% a year. Over 20 years, that fee gap alone can mean the difference between a modest nest egg and a comfortable retirement.
Tracking the benchmark — but why does that matter? A passive Shariah ETF does one job: follow its index as closely as possible. If the MSCI Malaysia Islamic Index goes up 8%, the ETF should return roughly 8% too, minus a small fee. That sounds boring, but it is the whole point. When you follow the market, you know exactly what you are getting. The index is published, the holdings are disclosed, and the rules for what goes in or out are written down in advance. You are not paying for someone's opinion or guessing whether your fund manager is having a good year.
What are my options to invest in Shariah-compliant ETFs?
Shariah ETFs listed on Bursa Malaysia
Seven Shariah ETFs currently trade on Bursa Malaysia. The old MyETF brand was rebranded to Eq8 Capital in May 2024 after Kenanga Investors took over from i-VCAP. Figures below are the latest publicly reported numbers, mostly late 2025.
| Fund (stock code) | Tracks | Asset class | Expense ratio | AUM |
|---|---|---|---|---|
| Eq8 DJIM Malaysia Titans 25 (0821EA) | Top 25 Shariah stocks in Malaysia | Malaysia equity | 0.49% | RM137m (Dec 2025) |
| Eq8 MSCI Malaysia Islamic Dividend (0824EA) | Malaysian Shariah dividend payers | Malaysia equity | 0.51% | Part of RM348m combined AUM (Nov 2024) |
| Eq8 MSCI SEA Islamic Dividend (0825EA) | ASEAN Shariah dividend payers | ASEAN equity | 0.78% | RM42m (late 2025) |
| Eq8 Dow Jones US Titans 50 (0827EA) | 50 largest US Shariah stocks | US equity | 0.48% | Part of RM348m combined AUM |
| Eq8 FTSE Malaysia Enhanced Dividend Waqf (0839EA) | Malaysian Shariah dividend basket, 50% distribution channelled to Yayasan Waqaf Malaysia | Malaysia equity plus waqf | 0.74% | Launched Dec 2024 |
| VP-DJ Shariah China A-Shares 100 (0838EA) | Top 100 Shariah-compliant China A-shares | China equity | 0.70% | RM32m (Feb 2025) |
| TradePlus Shariah Gold Tracker (0828EA) | LBMA Gold Price AM, physically backed | Commodity, physical gold | 0.76% | RM606m (late 2025) |
The gold tracker is by far the largest and most liquid of the lot. The DJIM Titans 25 is the oldest, first listed in January 2008 as Asia's first Shariah ETF. The Waqf ETF is a world first, channelling half of its annual distributions to charitable causes administered by Yayasan Waqaf Malaysia.
Global Shariah ETFs worth knowing
If you want broader exposure than Bursa offers, the US and European markets have deeper product ranges. Access for Malaysians depends on your broker.
| Fund (ticker) | Exchange | Tracks | Asset class | Expense ratio | AUM |
|---|---|---|---|---|---|
| HLAL — Wahed FTSE USA Shariah | NASDAQ | FTSE USA Shariah Index | US equity | 0.50% | ~USD 788m (Apr 2026) |
| SPUS — SP Funds S&P 500 Sharia Industry Exclusions | NYSE Arca | S&P 500 Shariah Industry Exclusions | US equity | 0.45% | ~USD 2.20b (Apr 2026) |
| UMMA — Wahed Dow Jones Islamic World | NASDAQ | DJ Islamic Market International Titans 100 | Global equity | 0.65% | ~USD 207m (Apr 2026) |
| SPRE — SP Funds S&P Global REIT Sharia | NYSE Arca | S&P Global All Equity REIT Shariah Capped | Global REIT | 0.55% | ~USD 179m (Apr 2026) |
| SPSK — SP Funds Dow Jones Global Sukuk | NYSE Arca | DJ Sukuk Total Return Index | Sukuk | 0.55% | ~USD 456m (Apr 2026) |
| SPTE — SP Funds S&P Global Technology | NYSE Arca | S&P Global 1200 Shariah IT Capped | Global tech | 0.55% | ~USD 110m (Apr 2026) |
| ISDW — iShares MSCI World Islamic UCITS | LSE | MSCI World Islamic | Global equity | 0.30% | ~EUR 914m (Apr 2026) |
| ISUS — iShares MSCI USA Islamic UCITS | LSE | MSCI USA Islamic | US equity | 0.30% | ~USD 381m (Apr 2026) |
| ISDE — iShares MSCI EM Islamic UCITS | LSE | MSCI Emerging Markets Islamic | EM equity | 0.35% | ~EUR 435m (Apr 2026) |
| IGDA — Invesco DJ Islamic Global Developed Markets UCITS | LSE | DJ Islamic Market Developed Markets | Global equity | 0.40% | ~USD 1.1b (Jan 2026) |
| DJIW — Wahed Dow Jones Islamic World UCITS | LSE | DJ Islamic Market World with humanitarian overlay | Global equity | 0.49% | Launched Jan 2026 |
| AMAL — Saturna Al-Kawthar Global Focused Equity UCITS | LSE | Active, global concentrated | Global equity | 0.75% | ~EUR 15m (Apr 2026) |
How can I invest in these ETFs?
| Platform | Best for | Minimum | Shariah access | Typical fee |
|---|---|---|---|---|
| Wahed Invest Malaysia | Hands-off, fully managed halal portfolio | RM100 (RM50 for Everyday Shariah Account) | Diversified Shariah ETF portfolios with auto purification | 0.39% to 0.79% wrap fee p.a., RM2.50/month minimum |
| Rakuten Trade | Low-cost Bursa and US self-directed trading | 1 board lot | All Bursa Shariah ETFs plus US Shariah ETFs, Islamic account available | Tiered brokerage from 0.1%, RM7 min per trade |
| Moomoo Malaysia | Mobile-first, beginner-friendly | None | Bursa Shariah ETFs plus US Shariah ETFs, built-in Shariah filter | Promo periods often 0% commission, then 0.03% |
| Interactive Brokers | Access to UCITS and niche global ETFs | None | Widest universe including ISDW, IGDA, DJIW, AMAL | From USD 0.0035/share (US), GBP 1.70 min (LSE) |
Every platform listed here is licensed and regulated by the Securities Commission Malaysia, which means your money is protected by the same investor safeguards that apply to any regulated capital market activity in the country.
What to weigh before you press buy
Goal and horizon. A 30-year-old saving for a house in five years should not be fully invested in a concentrated China A-shares ETF. A 40-year-old saving for retirement can accept more volatility for better long-run growth. Match the fund's volatility to your real-life timeline and stomach.
Costs. Look at the expense ratio — fees compound against you. Look at assets under management, since very small funds can close or struggle with wide bid-ask spreads. Look at tracking error if the fund is passive; you want the ETF to hug its index closely.
More considerations. Check the Shariah governance — which board oversees the methodology and whether purification is handled at fund level or left to you. And think about currency: holding USD-denominated ETFs introduces ringgit exchange rate risk, which cuts both ways.
There is no single right answer, only the one that fits your niyyah, your timeline, and your real budget. Start small, read the prospectus, and keep learning.
Disclaimer: This content has not been reviewed by the Securities Commission Malaysia. Past performance does not guarantee future returns.
Sources
- Bursa Malaysia — List of Shariah Exchange Traded Funds
- Eq8 Capital — Fund pages
- TradePlus — Shariah Gold Tracker
- Value Partners — VP-DJ Shariah China A-Shares 100 ETF
- Securities Commission Malaysia — Shariah screening methodology
- Securities Commission Malaysia — Resolutions of the Shariah Advisory Council, November 2025 (296th meeting)
- AAOIFI — Shariah Standard 21 on Financial Paper, Shares and Bonds
- MSCI — Islamic Index Methodology
- S&P Dow Jones Indices — Islamic Finance
- FTSE Russell — Shariah indices
- Wahed — FTSE USA Shariah ETF (HLAL)
- Wahed — Dow Jones Islamic World ETF (UMMA)
- Wahed — UCITS ETFs
- SP Funds — ETF range
- iShares — MSCI World Islamic UCITS ETF
- iShares — MSCI USA Islamic UCITS ETF
- iShares — MSCI EM Islamic UCITS ETF
- Invesco — DJ Islamic Global Developed Markets UCITS ETF
- HANetf — Saturna Al-Kawthar Global Focused Equity UCITS ETF (AMAL)
- Wahed Invest Malaysia — FAQ and fee schedule
- Rakuten Trade — Fee schedule
- Moomoo Malaysia — Brokerage fees and pricing
- Interactive Brokers — Commissions
- Bursa Malaysia — Bursa Anywhere FAQ
- Employees Provident Fund — Simpanan Shariah
- Zoya — Guide to stock purification
